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IRS Has Check in the Mail for Madoff Victims

August 6, 2009

The IRS has begun sending out refund checks to victims of Bernard Madoff’s Ponzi scheme, but the big checks have not yet gone out the door.

An article in The Wall Street Journal reveals that some CPAs have reported clients who have received up to half a million dollars from the IRS after filing amended returns, but some clients have been denied refunds. The IRS issued special rules for victims of Ponzi schemes in March that allows them to claim theft losses, which could lead to even higher payouts (see IRS Issues Guidance for Ponzi Scheme Victims). However, some Madoff victims are hoping to be able to claim more from the proceeds of lawsuits or by filing claims with the Securities Investor Protection Corp., or the court-appointed trustee, Irving Picard.

It’s good to see the IRS starting to pay the claims of victims of the Madoff scheme, and Picard has said he and the SIPC have begun paying claims as well. They should be making an extra effort with those facing hardship such as losing their homes, and get the checks out to those who have suddenly found their savings gone and their hopes for the future dashed. CPAs are helping clients claim the money, and it’s important to follow up with the IRS just in case that check got lost in the mail.

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